Эрдсийг эрдэнэст
Ирээдүйг өндөр хөгжилд
Mining The Resources
Minding the future


                       (UNOFFICIAL TRANSLATION)


16 January , 2014        Number  18                      State Palace,                     Ulaanbaatar city

Adoption of State Minerals Policy

Enacted by State Ikh Khural based on the item 8.1.1 of the Article 8, Minerals Law and the item 43.1 of the Article 43, Law of Mongolian State Ikh Khural:

1. Mongolian State Ikh Khural has approved to adopt the “State Minerals Policy” by addendum.
2. In connection with the adoption of the “State Minerals Policy”, Mongolian Government /N. Altankhuyag/ is entrusted with implementing the following actions:
1/ To develop respective draft laws of Minerals’ Industry in compliance with the principles and purposes of the “State Minerals Policy “ and submit them to State Ikh Khural for approval  and implementation;
2/ To reflect purposes and directions of the “State Minerals Policy” to annual Social and Economic Guidelines of Mongolia, state budget, state monetary policy and mid and long-term planning.
3. The Economic Standing Committee /B. Garamgaibaatar/ of the State Great Khural is obliged with controlling the implementation of the “State Minerals Policy” .


Addendum to Resolution No. 18, 2014 by
the Mongolian State Ikh Khural

One. General Provisions

1.1. “State Minerals Policy” focuses on providing national primary interests by developing conspicuous and responsible mining relied upon private sector, in addition it will aim to develop multisectored and balanced economic structure in the short and mid-term.
1.2. The objective of the “State Minerals Policy” is to establish stable investment environment, to improve quality of mineral exploration, mining and processing by encouraging use of environment friendly and advanced techniques, technologies and innovations, to produce value-added final products and strengthening competitiveness of the country in the international market.
1.3. The “State Minerals Policy” shall be developed consistent with policies of other sectors.  
1.4. The policy will define the principles and development directions of state minerals policy and will focus on improvement of management system and these activities shall be reflected to the minerals sector laws, regulations and mid & long-term development programs and sub-programs.     

Two. Mineral sector principles

2.1. The main principles are defined as follows: to provide sufficient social and economic benefits from mining industry to the public while considering development of the mineral sector and Mongolian National Development Policy which is based on Mongolian Millennium Development goals:
2.1.1. To  provide long-term sustainability for  the Minerals Policy, make sure ensure to base on research and investigation and not to breach any stakeholders’ legal interest when making any decision with regard to legal and tax environment;   
2.1.2. To encourage and introduce healthy, environmentally-friendly advanced modern technology, techniques and innovations for exploitation and processing industry;
2.1.3. To ensure state organizations and companies to work open and responsibly in developing mineral sector;
2.1.4. The mineral sector investors should follow laws, to work for mutual benefit and support policy of company good governance;
2.1.5. To ensure that the State provides equal terms and conditions for minerals’ sector investors and not to discriminate by ownership types when implementing “State Minerals Policy”;
2.1.6. To make all information open to public, that is not restricted by law, concerning the geological exploration, mining and processing activities at all levels,  funded by state and private sector;
2.1.7. To improve occupational safety and hygienic laws and regulations within mineral sector and to satisfy international standards and to implement them accordingly;
2.1.8. To maintain proper level of state involvement in mineral exploration and mining activities while improving the state administration at registration, approval and supervision levels.

Three.  Policy guidelines for the mineral sector

3.1. Within the scope of improving legislative environment for the mineral sector:                                                                                                                                                                                                                                                   
3.1.1. To form specific legal environment for exploration and mining of common-occurrence mineral deposits;
3.1.2. To support cooperation and legal organization of artisanal miners by the state policy and by improving related legislative regulation;
3.1.3. To improve registration and supervision of transferring /purchasing of entity and company’s controlling shares/  mineral exploration and mining special licenses;  
3.1.4. To improve the corresponding laws and regulations to strengthen control on gold mining and sales;
3.1.5. To develop and follow long, mid and short-term programs to mine,  produce and do reserve accumulation of domestic minerals by conducting regular researches and investigations for the current situations and future perspectives of world-wide and regional economy;
3.1.6. To provide with legislative environment for the state protection of rare  mineral rocks and samples by identifying the distinctive properties of Mongolian geological structures, unique undercut of strata and to establish national geo-park complex;
3.1.7. To introduce and encourage international initiatives such as open and responsible mining and assessment of social and economical impacts;
3.1.8. To provide legislative environment that professional organization with qualified engineering research team shall perform researches for mineral sector;
3.1.9. To shift to international standards that evaluates mineral deposit reserve;
3.1.10. To provide legislative environment that the deposits that important to state and regional development shall be used by integrated way;
3.1.11. To form system of Mineral Professional
Board according to the International Standards by transferring the rights and obligations over to professional associations and qualified experts.
3.1.12. To develop dispute resolution system in compliance with the International Standards and to train qualified lawyers, economists, analysts and arbiters.  

3.2. Geological industry:

3.2.1. Within the objective of constantly striving to maximize state treasure funds: To follow a policy which develops and supports geological exploration as a priority in order to satisfy sustainable growth of mining industry? To develop “Mongolian Regionalized Development Concept” considering the forested zones, location of water reserves, centralization and distribution of agricultural industry and locations of mineral deposits and mines, to perform geological exploration and prospecting activities at an approved territory by the state and to attract private sector investment into these activities. To increase the number of geological mapping and prospecting works while considering mineral ore zones, mineral basins, border areas and infrastructure development plan; To run state supported geological researches on finding raw materials for new techniques and technology
3.2.2. Within the scope of the objective to intensify geological explorations prospecting activities: To provide policy support to involve private sector into the geological scientific research, thematic study, drawing and prospecting activities to determine geological structures, formations and distribution system of minerals in Mongolian territory which normally carried out by the state budget; To further expand Mongolian geological research coverage area by increasing volume of geological mapping, general prospecting, airborne geophysical activities and work quality and constant increase of state budget financing is needed; Within the scope of geological mapping and general prospecting activities run by state budget to do complete geophysical, geochemical and mining and drilling activities, then to carry out more specific researches in some areas with ore and occurrences; To strengthen the nationwide consolidated geo-ecological research and to perform specialized geo-ecological research in certain cities, provinces and soums; To increase the quality level and efficiency of geological research, exploration and prospecting activities by employing experienced professional engineering crew and by choosing the optimal methods and advanced technologies suitable for the characteristics of the geological formation in the given territory; All the information (reserve, final reports) from various geological research and exploration activities carried out in Mongolian territory (geological studies such as mineral water, hydro-geological research, oil and natural gas, minerals, radio-active minerals, and engineer-geology etc) will be integrated in a geo-information database for state registration; To expand the cooperation with foreign countries on geological industry and to encourage private sector involvement on cooperative and effective research projects; To improve the registration and supervision system of mineral deposits by ensuring annual update of mineral reserves in Mongolian territory; To fully develop and update integrated national geo-database by compiling the reports and results of mineral and geological researches according to the internationally recognized methods and deposit classification; To release updated instructions and standards for storage and recording of geological and exploration work reports, primary documents, material and rock samples and to transfer the integrated national geo-database into electronic database system; To change the special licensed area into the cadastral unit area according to the international standards.     

3.3. Mining industry:

3.3.1. The objective is to abide a policy that develops conspicuous and responsible mining and processing industry which provides environmental friendliness, export-oriented and met the requirements of safety and hygiene considerations and supportive for economical growth and more importantly complied with international modern standards considering Mongolian future development mainstream;
3.3.2. To maximize the state control, regulation and responsibility for the strategically important mineral deposits declared by Resolution No. 27 by State Ikh Khural in 2007 to improve their operation and economical benefit and to develop better cooperation between state and private sector;
3.3.3. To support organizations operate transparent and responsible way using less harmful technology against human health and environment;
3.3.4. To accurately plan the production and processing volumes in consistent with national economy, industrialization situations and future perspectives of internal and external markets;
3.3.5. To ensure that the state and municipal control, permission fee and charges over mining operations are imposed without any bureaucracy and overlapping;
3.3.6. To support the manufacturing of the products which will replace mineral originated import goods and materials;
3.3.7. To introduce scientific and technological achievements to mining industry in order increase productivity in mining industry, thus maximizing its competitiveness

3.4. Processing industry:

3.4.1. To make final decisions after completely studying factors such as market competitiveness, amount of production water consumption, toxic waste produced by operation and potential adverse impacts on human health and environment when developing processing industry;
3.4.2. To improve legislative environment of processing industry;
3.4.3. To maximize processing level of minerals and support value-added productions by policy;
3.4.4. Following projects have to be supported: coal concentration, coking coal and chemical plants, coal deposit based thermal factors, to extract smokeless liquid fuel and gas from brown coal, to extract liquid fuel from flammable shale.
3.4.5. To increase processing level of minerals supported by tax and financial incentives offered by the State.
3.5. Local development and defense of interests for local people:
3.5.1. To provide conditions to understand each other’s interests between investors and local community before commencing mining operation at given territory and to increase the awareness and responsibilities of municipal management in convincing what social and economical significance will be brought by mining project;
3.5.2. To ensure that the local development agreement, made between investors and local community intent on supporting the social development during the mining operation,  is clear and based on participatory principles.

3.6. Environmental protection and rehabilitation:

3.6.1. To provide healthy and environment friendly conditions at mining and processing stages;
3.6.2. State-owned entity shall operate as a client giving contracts to build State and Private sector partnership;
3.6.3. To develop post-mining rehabilitation and closing standards and regulations complying with international standards;

3.6.4. In the mining and processing operation, surface water shall predominantly be used instead of underground fresh water and the processed water shall be used again,  for mining consumption gray water shall be used and any advanced technology to use water will be supported as indicated by the corresponding law;
3.6.5. To support efficient and environmentally healthier technology use for re-cycling and re-processing of mining waste.

3.7. Management of mining industry, organization and human resources:

3.7.1. The State shall establish and operate a “Policy Board” with balanced representation of state organizations, investors, professional associations, and civil society organizations. The Board shall be engaged in consulting and supporting implementation of the State Minerals Policy;
3.7.2. To change state invested companies to open shareholding companies step by step;
3.7.3. To uphold company good governance principle when selecting management of state-owned entities;
3.7.4. To establish special funds from mining industry income to the state budget. The funds will used to establish economical diversity and stability, to support export oriented production, to protect and rehabilitate environment and to improve national competitiveness.
3.7.5. To carry out sales activities of mineral products for internal and external markets by means of explicit, accurate, highly effective and using marketing methods. To establish a mineral stock market to set a fair price, to develop domestic stock market and to develop comprehensive export policy;
3.7.6. To improve state organization service so that is becomes explicit, publicly open and effective and to set civil society control by publicly informing the operational structure of mineral sector related all level Governmental organizations, license authorization, standards and duration of licenses;
3.7.7. To improve responsibility mechanisms by strengthening the systems of professional supervision-inspection, evaluation and auditing within the mineral sector;
3.7.8. To organize a national geological department according to the international standards, which will undertake complete geological research regardless of mineral types and to constantly operate by ensuring its unified and proper state of management and organizational structure;
3.7.9. To develop and update the key mineral export product classification in compliance with customer demand and international standard requirements and to follow it at all levels of activity;
3.7.10. To reduce the exportation of minerals in raw-material form via step-by step measures, support the production of value-added, semi-processed and final products, to support their marketing at international market price, and to improve the estimation methods and methodology for mineral deposit use payment to maximize the income from the mineral industry;
3.7.11. To make central government and municipal organizations activities more consistent to support the private sectors within the mineral sector;
3.7.12. Special attention shall be paid in training of national human resources for mining industry and qualified engineers and technical workers shall be prepared in relevant domestic and abroad universities;
3.7.13. To improve the coordination between the research and development institutions within the mineral sector. Mineral sector’s strategic planning, research and development projects and programs shall be done in partnership between private and public sectors.

Four.   Implementation methods, stages and expected results of the State Minerals Policy

4.1. Implementation methods for the State Minerals Policy:
4.1.1. Cabinet, state central organization in charge of mining, respective agencies of Government and entities shall adopt a plan according to the corresponding laws, resolutions, rules, regulations and standards when implementing the State Minerals Policy and conduct the implementation accordingly;
4.1.2. Within its operation plan, Government shall coordinate the State Minerals Policy with policies of other sectors, to provide with directions on planning and policies, to carry out supervision-inspection and organize measures to evaluate and control its results;
4.1.3. Government shall reflect “State Minerals Policy” purposes and directions to annual Social and Economic Guidelines of Mongolia, state budget, state monetary policy.
4.1.4. State central organization in charge of mining shall supervise and inspect “State Minerals Policy” implementation and evaluate progress and outcomes. It has to report the results of the given year to Government not later than the first season of the incoming year;
4.1.5. To perform the supervision-inspection and evaluation in the presence of state administration central organization, municipal organizations, professional associations, scientific and non-governmental organizations. It has to have a evaluation criteria for each goals set by the documents of “State Minerals Policy”;  
4.1.6. To define potential risks and counter-measures must be taken as a part of mid and short-term planning.

4.2. Implementation stages for State Minerals Policy:

4.2.1. To improve legislative environment and to develop corresponding rules, regulations, program and project (2014 and 2015);
4.2.2. To implement program and project (between 2014 and 2025);
4.2.3. To summarize mid-stage achievements of “State Minerals Policy” and proceed with further accomplishment of given goals (2020 and 2025).

4.3. Expected results from the implementation of State Minerals Policy:

4.3.1. To execute geological research and exploration according to the State policy while maximizing national mineral reserves providing long-term sustainable development for mining industry;
4.3.2. To use mineral reserves completely, appropriate level and to increase the diversity and volume of value-added final products by promoting processing level and using environmentally-friendly technology;
4.3.3. To minimize industrial incidents and accidents by providing occupational safety and hygienic conditions at all levels of productions with the help of well practiced integrated standards for mining and processing operations;
4.3.4. To be able to do  long-term planning of infrastructure development /road networks, power plants, cities and settlement centers/ accompanied by mining projects;
4.3.5. Over-concentration of populations will be reduced as a result of major industrial centers’ development;
4.3.6. Unemployment will be reduced with the training and employment of national human resources for mineral and infrastructure sector;
4.3.7. The activities for environmental protection, mine closure, rehabilitation and long-term monitoring shall be done according to laws and international standards and become more arranged, orderly and responsible;
4.3.8. To restrict mining, processing operations around the riverbed areas, out-flowing basins, forested areas, agricultural fields, fertile pastureland, Gobi oasis, lakes and ponds in order to provide ecological balance and to produce healthy eco-food products so that it would provide healthy nutrition and safe  living environment for the population;
4.3.9. All mineral sector activities shall run according to the applicable laws and regulations and be explicit to the public. New laws and projects should reflect public opinions in it;
4.3.10. To provide a good business environment in the mineral sector where trade of mineral products are openly carried out at a mineral stock market in compliance with international standards.